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Employers' Duty to Monitor Employees' Internet Activities

By Ann Benedetto Stevens
August 16, 2006

In a case with potential national implications, a New Jersey court recently held in a case of first impression that employers have a legal obligation to investigate an employee's activities when they know or have reason to know that the employee is using a workplace computer to access child pornography. Doe v. XYC Corporation, 382 NJ Super. 122 (App. Div. 2005). The court also held that an employer is required to report the employee's activities to the proper authorities and to take 'effective internal action' to stop the employee's activities. Based on the facts of the case, the court also ruled that 'no privacy interest of the employee stands in the way of this duty on the part of the employer.' XYC Corporation filed notice that it was petitioning the New Jersey Supreme Court to review the decision. However, the parties settled the matter, and XYC Corporation withdrew its petition.

This ruling may have far-reaching implications for employers because it imposes duties on them to: 1) ensure that their employees' illegal work conduct does not cause injury to third parties, and 2) report an employee's potentially illegal conduct to the proper authorities. The XYC Corporation case may be the beginning of a trend in which other courts adopt a similar analysis in situations involving serious public policy issues such as child pornography or child abuse. In fact, the California Supreme Court has held that three school districts were potentially liable to a 13-year-old girl who had been sexually molested by a former employee. See Randi W. v. Muroc Joint Unified School Dist., 14 Cal. 4th 1066 (1997). The former employers had unconditionally praised the former employee in their letters of recommendation, even though they knew of charges or complaints of his prior sexual misconduct with students. The case also highlights the risk that third parties can sue employers for the criminal acts of their employees. Although the ruling in the XYC Corporation case is limited to the context of child pornography, it may be expanded in the future to impose liability on employers for their employees' use of work computers for other criminal activities.

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